The average taxpayer would see a roughly $106 income tax cut under a $250 million Republican proposal on how to spend unanticipated state tax revenue.
Assembly Republicans on Friday unveiled the plan for the roughly $452 million in extra revenue. The plan also includes a nearly $45 million cut to personal property taxes paid by businesses and another $100 million would go toward paying down state debt. The plan does not call for any additional spending on education, which Democratic Gov. Tony Evers called for last week.
“Smart budgeting over the past 10 years is paying big dividends for our Wisconsin taxpayers,” Rep. Joan Ballweg, R-Markesan, said, adding GOP lawmakers are hopeful Evers, who has veto authority over such legislation, approves the proposal. Ballweg said Republicans had not discussed the proposal with Evers before unveiling it.
About 64% of income tax filers — about 2 million people — would be eligible for the tax cut, which would be reflected in a standard deduction increase. Single filers would see an average tax cut of $106. The average tax cut for married couples would be $145 while the average cut for all other filers would be about $81.
Individuals earning more than about $120,000 and married couples earning more than about $144,000 would not be eligible for the tax cut.
The income tax cut would cost nearly $250 million in 2020-21 and a little over $224 million in 2021-22, according to estimates from the nonpartisan Legislative Fiscal Bureau.
Senate Majority Leader Scott Fitzgerald, R-Juneau, who said earlier this year he would prefer to see a property tax cut, in a statement signaled likely support for the income tax cut proposal among Senate Republicans.
“I fully support the direction we’re headed with this plan,” Fitzgerald said.
The Senate and Assembly are expected to take up the proposal next week when the Assembly is planning to meet for the final time before the end of this year’s session.
In a statement, Evers spokeswoman Britt Cudaback criticized the Republicans’ decision to reject Evers’ request to spend surplus dollars on education funding paired with a tax cut.
The statement does not address whether Evers would approve the proposed tax cut, should it reach his desk.
“Unfortunately, Assembly Republicans made it clear today that they would rather break their promise to the people of our state than work together on funding our schools and reducing property taxes in Wisconsin,” Cudaback said in a statement, referring to statements Republicans have made about wanting the state to fund two-thirds of the cost of public schools.
The latest budget falls just short of that mark with the state covering 65.5% of the cost of next school year.
Friday’s announcement comes one week after Evers called on legislators to invest about $250 million of the state’s extra tax revenue to increase education funding and lower property taxes.
Republican leaders in the Assembly and Senate almost immediately signaled rejection of Evers’ proposal to commit to two-thirds funding in statewide K-12 and spending on school-based mental health and special education aid. The spending also would have included $130 million aimed at lowering property taxes through the equalization aid formula — the state’s formula for funding public schools based on property values and number of students.
Assembly Minority Leader Gordon Hintz, D-Oshkosh, in a statement also criticized what he called a “last-minute, hastily thrown together proposal” by Republicans that fails to address education and mental health needs.
Senate Minority Leader Jennifer Shilling, D-La Crosse, said she was disappointed in the proposal by Republicans.
Evers had proposed a $1.4 billion increase in education spending during last year’s budget session. Republicans reduced that to an increase of about $505 million over two years. Evers used his veto pen to increase the amount by about $65 million.
In addition to tax credits proposed by Republicans Friday, GOP-led legislation working through the Legislature would institute a three-year, $27 million annual tax credit for farmers.
Farmers would be able to apply the tax credit to up to 66% of property taxes on buildings “exclusively used for farming.” The credit would be capped at $7,500, and claimants would have to make at least $35,000 in annual farm income to be eligible for the credit.
Farmers already pay virtually nothing in income taxes because of an agriculture and manufacturing tax credit Republicans created in 2011.
Revenue projections by the nonpartisan Legislative Fiscal Bureau report the state is expected to close out the biennium with a general fund balance of about $620 million.
The state has run a deficit with each of its budgets for at least the past 30 years under generally accepted accounting principles. By law the state budget must be balanced, and the state has achieved that for decades by using a different accounting system.
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